Business

LONDON — Europe's major equity markets rebounded on Tuesday from recent falls as investors fished for bargain shares on the eve of key US inflation data, dealers said.

In afternoon deals, London stocks added 0.5 per cent, Paris gained 0.8 per cent and Frankfurt won 0.9 per cent, after all three began the week in negative territory.

Wall Street opened lower ahead of a Senate confirmation hearing of Jerome Powell following his renomination as chief of the US Federal Reserve (Fed). 

In his prepared remarks released ahead of his appearance, Powell indicated that the bank is ready to act to prevent inflation from becoming entrenched, reinforcing expectations of interest rate hikes. World oil prices recovered from Monday's drop but the dollar traded mixed.

Bitcoin advanced close to $42,000, one day after the world's most popular cryptocurrency sank below $40,000 on fears of reduced liquidity as a result of US monetary policy tightening.

Richard Hunter, head of markets at Interactive Investor, pointed to "some tentative buying activity... as investors sought to benefit from the recent dips".

However, he cautioned that markets remain overshadowed by surging inflation — and central bank efforts to contain it.

"The backdrop remains unchanged, with the pace and amount of [US] interest rate rises likely to become clearer over the next few sessions in the face of persistent inflation," Hunter added.

On the downside, most Asian indices retreated on lingering concern about the Fed's plans to wind back its financial support measures and lift interest rates within months in order to tackle surging inflation.

Markets are now cautiously awaiting the release of US inflation figures on Wednesday, which could play a major role in the Fed's thinking.

"I'm not sure the inflation data tomorrow is going to put investors' minds at ease, with CPI [consumer price index] seen hitting a multi-decade high above 7 per cent," said market analyst Craig Erlam at Oanda. 

"A higher reading could spook investors once again just as equity markets appear to be stabilising," he added.

While the fast-spreading Omicron coronavirus variant plays on nerves, traders are now coming to terms with the imminent end to the pandemic era of ultra-cheap cash, which helped the economic recovery and fanned a global rally for nearly two years.

A pick-up in consumer activity, surging wages, supply chain problems and rising energy costs are combining to push inflation in several countries to highs not seen for a generation, ramping up pressure on central bankers to act before it gets out of control.

Fed ready to act 

Several global central banks have already started hiking borrowing costs, including the Bank of England.

All eyes are now on the US Fed as it tees up its first move, with commentators predicting it will come in March, after it has finished winding up its bond-buying programme.

That could be followed by two or three more by the end of the year, according to analysts.

"Although Jerome Powell has already released his text for the confirmation hearing there will still be chance for him to reveal more at the subsequent Q&A session," said analysts at Moneycorp.

LONDON — US and European stock markets fell on Monday as investors are concerned that a looming interest rate hike awaits all-important US inflation numbers later in the week.

Traders have been on the edge since the US Federal Reserve (Fed) signalled last week that it was ready to raise interest rates sooner than expected to tame runaway prices.

"Risk sentiment has been pressured by concerns surrounding rising rates and the Fed's indication to tighten policy more aggressively," said a note by market analysts Briefing.com.

Investors will now be keeping a watch on inflation readings out of both the United States and China this week as they try to assess the outlook for the global economy with rocketing energy costs and supply snarls compounding problems caused by the fast-spreading Omicron COVID variant.

"With a quiet start to the week for big corporate and economic announcements, markets could remain in a holding pattern until Wednesday when US inflation figures will reveal just how acute inflationary pressures are in the world's largest economy," said AJ Bell investment director, Russ Mould.

Wall Street opened lower, with the Dow Jones Industrial Average down 0.4 per cent, the S&P 500 shedding 0.7 per cent and the tech-heavy Nasdaq sinking 1.2 per cent.

Europe's main markets — London, Paris and Frankfurt — were all down in afternoon trading, but Asia finished the day higher.

Stock markets had mostly fallen on Friday after US data showed fewer new jobs than expected were created last month even as wages saw strong gains.

The closely watched non-farm payrolls figure on Friday came in well short of forecasts, marking a disappointing end to the year.

Fed officials are now faced with the problem of having to adjust monetary policy to rein in prices while at the same time avoid damaging the economic recovery and causing a panic on markets as the cheap cash that has fuelled a near-two year rally dries up.

The bank has already started tapering its vast bond-buying programme put in place at the start of the pandemic and has signalled it could start lifting interest rates from record lows from March, with some observers predicting three hikes this year.

There were also indications officials were considering reducing its massive bond holdings, putting further upward pressure on lending costs.

The yield on 10-year Treasuries, a key indicator of future interest rates, climbed last week at its fastest pace in almost a year.

Bitcoin down 

In other markets, oil prices were slightly lower as traders mulled the supply-side impact of ongoing unrest in Kazakhstan, which is a member of the enlarged OPEC+ producers' grouping.

Following a record year in 2021, Bitcoin — the world's biggest cryptocurrency — fell below the $40,000 mark on Monday, its lowest level since September. 

After taking a tumble on Monday, it recovered some ground, rising to $41,198. 

Its recent decline meanwhile continues to drag down other cryptocurrencies.

"The main culprit behind the slump in crypto prices is the Fed's decision to withdraw massive liquidity, which has been pumped into markets since the onset of the coronavirus pandemic," Naeem Aslam, chief market analyst at Avatrade, said.

In corporate news, video game publisher Take-Two announced a $12.7 billion to acquire Zynga in a transaction that will combine the creators of "Grand Theft Auto" and "Farmville".

By Daniel Hoffman, Ali Bekhtaoui
Agence France-Presse

PARIS — After limping its way back from the COVID pandemic last year, the global economic recovery has been rattled by the Omicron variant's rapid rise.

Economic Growth

Last month, the head of the International Monetary Fund (IMF), Kristalina Georgieva, warned that global economic growth forecasts may have to be slashed following the emergence of Omicron.

The IMF has previously banked on growth of 5.9 per cent for 2021 and 4.9 per cent this year, but it could now revise its estimates later this month.

To soften the blow on the economy, US health authorities have cut the isolation period for asymptomatic cases by half to five days.

Mark Zandi, chief economist at Moody's, said he expects US growth of 2.2 per cent in the first quarter, more than half lower than a previous estimate of 5.2 per cent.

"Omicron is already doing economic damage, as is clear from weaker credit card spending, a decline in restaurant bookings, air flight cancelations, and many schools going back to online learning," Zandi said.

"However, I do expect Omicron to pass through quickly and for growth to rebound in the second quarter, and growth for the year to be unaffected," he added.

"Broadly, I think each wave of the virus is doing less damage to the healthcare system and economy than the previous wave."

In the eurozone, tighter restrictions, consumer caution and absenteeism will reduce economic activity in the next few weeks, but the economy will rebound in February, according to Andrew Kenningham, chief Europe economist at Capital Economics.

Countries with lower vaccination rates, which are mainly developing economies, face greater uncertainty, and a zero-COVID policy in China could put a brake on growth in the world's second biggest economy as it locks down entire cities.

Will tourism suffer? 

The travel industry was looking forward to a rebound in 2022 after it was devastated by border closures and lockdowns.

But the emergence of Omicron during the key winter holiday season caused thousands of flight cancellations, cruises to be forced to dock and fewer hotel bookings.

Investors, however, have been optimistic, as shares of airline and cruise companies have risen in recent weeks.

"The markets seemed to be looking at the post-Omicron period," said Alexandre Baradez, analyst at IG France.

Will inflation worsen? 

The economic recovery has had an adverse side effect: Inflation that has soared to decades-high levels in the United States and Europe as energy prices soared and rising demand faced supply shortages.

Central banks have insisted that high inflation is only temporary and prices will eventually fall, but it has hurt consumers and businesses.

Could it get worse?

"Little is certain about Omicron's impact on consumer demand, but people who stay at home because of the variant are more likely to spend their money on retail goods rather than services like dining out or in-person entertainment," said Jack Kleinhenz, chief economist at the US National Retail Federation.

"That would put further pressure on inflation since supply chains are already overloaded across the globe," he said.

Supply chain bottlenecks caused shortages of a slew of materials last year, driving up prices of many products. Higher demand for products on goods on supply could further fuel price increases.

The Federal Reserve rattled markets this week as minutes from its December meeting showed that the US central bank was ready to tighten monetary policy more aggressively to tame inflation.

Elsewhere, inflation is eroding purchasing power after running into double digits in Brazil and Nigeria.

In Britain, the British Chambers of Commerce said 58 per cent of firms expect their prices to increase in the next three months.

End of stimulus? 

Governments deployed massive stimulus programmes in 2020 to save their economies, piling up $226 trillion of debt, according to the IMF.

Furlough schemes to keep people employed "made sense" when there was so much uncertainty and entire industries shut down, said Niclas Poitiers, research fellow at Bruegel, a Brussels-based think tank.

"I don't see yet the necessity for massive funds to the economy," Poitiers said.

The United States and Europe are instead investing in structural programmes, such as President Joe Biden's $1.75 trillion "Build Back Better" social and climate spending plan.

SEOUL — Samsung Electronics expects operating profits for the fourth quarter to soar 52.5 per cent, the South Korean tech giant said in a statement on Friday.

The company attributed the projection to record sales.

The world's biggest smartphone maker forecast 2021 fourth-quarter operating profits at around 13.8 trillion won ($11.5 billion), up from 9.05 trillion won in the same quarter last year.

The firm was boosted by record sales in the quarter, estimated at 76 trillion won, up 23.5 per cent on-year, according to the statement, which added that the forecast reflected a one-time bonus payment to employees.

A spokeswoman said annual sales in 2021 were also expected to be the highest ever.

The operating profit estimate was below analysts' estimate of 15.2 trillion won, according to Bloomberg News.

"A continued price growth in memory chips that ran three consecutive quarters until October last year has boosted Samsung's profit margins," said Park Sung-soon, an analyst at Cape Investment & Securities.

"The most significant source of income for Samsung lies in the memory chip business."

Samsung Electronics did not provide details Friday on the performance of its various divisions. The firm is expected to release its full results on January 27.

Analysts and investors are also keeping an eye on the impact of the citywide COVID lockdown in Xi'an, China, which is home to a Samsung semiconductor plant.

Samsung said last week that it had to "temporarily adjust operations" at the Xi'an facilities, without detailing how that would impact production.

Pandemic boom 

While the coronavirus pandemic has wreaked havoc on the world economy, it has helped many tech companies boom.

Pandemic-driven working from home has boosted demand for devices powered by Samsung's chips, as well as home appliances such as televisions and washing machines.

Analysts had also expected the firm to benefit from the traditionally lucrative holiday season.

The world's biggest memory chip maker, Samsung Electronics has aggressively stepped up investment in its semiconductor business as the world battles chip shortages that have hit everything from cars and home appliances to smartphones and gaming consoles.

In November, it announced a new microchip factory in Texas, a $17 billion investment. The plant is expected to be operational by the end of 2024.

It joined rivals TSMC from Taiwan and US firm Intel in expanding chip manufacturing capacity in the United States, which sees the sector as an area of strategic competition with China.

The firm is also investing in the development of advanced technologies such as artificial intelligence, robotics and 5G/6G communications.

Samsung Electronics is the flagship subsidiary of the giant Samsung group, by far the largest of the family-controlled empires known as chaebols that dominate business in South Korea.

The conglomerate's overall turnover is equivalent to around one-fifth of South Korea's gross domestic product.

Bloomberg News contributed to this story 

PARIS — French regulators have hit Google and Facebook with 210 million euros ($237 million) in fines over their use of "cookies", the data used to track users online, authorities said on Thursday.

The 150-million-euro fine imposed on Google was a record by France's National Commission for Information Technology and Freedom (CNIL), beating a previous cookie-related fine of 100 million euros against the company in December 2020.

Facebook was handed a 60-million-euro fine.

"CNIL has determined that the sites facebook.com, google.fr and youtube.com do not allow users to refuse the use of cookies as simply as to accept them," the regulatory body said.

The two platforms have three months to adapt their practices, after which France will impose fines of 100,000 euros per day, CNIL added.

Google said it would change its practices following the ruling.

"In accordance with the expectations of internet users... we are committed to implementing new changes, as well as to working actively with CNIL in response to its decision," the US firm said in a statement. 

Cookies are little packets of data that are set up on a user's computer when they visit a website, allowing web browsers to save information about their session.

They are highly valuable for Google and Facebook as ways to personalise advertising -- their primary source of revenue. 

But privacy advocates have long pushed back and a European Union law passed in 2018 placed strict rules on internet companies, obliging them to seek the direct consent of users before installing cookies on their computers.

LONDON/ TOKYO — European equities sank on Thursday after the Federal Reserve signalled it was ready to hike interest rates sooner than expected to combat elevated inflation, sparking a global selloff.

London's benchmark FTSE 100 index slid 1.0 per cent to 7,445.04 points, after heavy losses earlier in Asia and overnight on Wall Street.

In the eurozone, Frankfurt's DAX index also shed 1.0 per cent to 16,111.16 points and the Paris CAC 40 lost 1.3 per cent to 7,283.62.

"The selloff for the European markets continues as every single sector is in red," said AvaTrade analyst Naeem Aslam.

"Everyone is concerned about the Fed's fast and furious monetary policy stance."

 Tokyo stocks plunged more than 2.8 per cent on Thursday over rekindled speculation that the US Federal Reserve may start tightening monetary policy sooner than expected.

The benchmark Nikkei 225 index gave up 2.88 per cent, or 844.29 points, at 28,487.87, while the broader Topix index lost 2.07 per cent, or 42.26 points, to 1,997.01.

The dollar stood at 115.85 yen, off from 116.04 yen in New York late Wednesday.

Japanese shares began the day with falls "after US shares dropped following minutes of the FOMC (Federal Open Market Committee) meeting that prompted expectations the Fed will accelerate the normalisation of monetary policy," senior market analyst Toshiyuki Kanayama of Monex said.

Among major Tokyo shares, Uniqlo operator Fast Retailing fell 4.89 per cent to 60,880 yen after the firm reported falling December sales due to warm weather. 

Sony Group plunged 6.89 per cent to 14,455 yen after two days of rallies, and after it announced on Wednesday it would explore entering the rapidly growing electric vehicle market.

Toyota gave up earlier gains and ended down 0.33 per cent at 2,284.5 yen, as did Honda, which fell 0.23 per cent to 3,408 yen.

High-tech investor SoftBank Group lost 0.89 per cent at 5,372 yen, and chip-testing equipment maker Advantest dropped 4.43 per cent at 10,780 yen.

The Fed signalled a more aggressive rate-tightening path than previously flagged, with officials arguing "it may become warranted to increase the federal funds rate sooner or at a faster pace than participants had earlier anticipated." The much-anticipated release of minutes from the US central bank's December policy meeting showed that while officials were concerned about the fast-spreading Omicron coronavirus variant, they were also confident the world's top economy was in good shape and able to absorb high borrowing costs.

"Last night's Fed fallout continues to reverberate," added CMC Markets analyst Michael Hewson.

"What appears to have spooked markets is talk about balance sheet reduction, and it is this that has prompted a quite a bit of anxiety with some (Fed officials) talking about the probability of when it might be appropriate to reduce the size of the balance sheet, thus pulling liquidity out of the market.

"This appears to have caught markets off guard, prompting concerns over tighter liquidity conditions," cautioned Hewson.

NEW YORK — Nostalgic for those mobile phones with a physical keyboard? Brace yourself, because as of Tuesday many models of the once-indispensable BlackBerry devices will no longer work.

The Canadian company has decided to pull the plug on new updates of its operating system, meaning most BlackBerries that became synonymous with the emerging mobile digital culture of recent decades — and were embraced by politicians and business executives — will not operate correctly after January 4.

"As of this date, devices running these legacy services and software through either carrier or Wi-Fi connections will no longer reliably function, including for data, phone calls, SMS and 9-1-1 [emergency] functionality," the company said on its website last month.

The "end-of-life" (EOL) move, as Blackberry called it, impacts BlackBerry 7.1 OS and earlier, BlackBerry 10 software, BlackBerry PlayBook OS 2.1 and earlier versions. 

The company did say, however, that devices using Google's Android operating system, including the BlackBerry KEY2 released in 2018 and designed by China's TCL Group, would not be affected by the changes.

The EOL decision marks the end of an era in mobile telephony, which reached its peak in the late 2000s when BlackBerry met with widespread commercial success, especially among professionals.

The large QWERTY keyboard for easier emailing and the simple, uncluttered design were favoured by business leaders, celebrities, politicians and journalists.

Former US president Barack Obama was famously addicted to his BlackBerry and insisted on keeping his phone in the White House after his election in 2008, forcing his security detail to build him a custom model reduced to basic features to keep his data safe.

BlackBerries were ultimately supplanted by smartphones, notably beginning with Apple's iPhone, which launched in 2009.

Attempts to relaunch BlackBerry fizzled, and its partnership with TCL for the KEY2, the latest model, was not renewed.

Since 2013, the firm based in Waterloo, Ontario and formerly named Research In Motion has focused on software development and production.

LONDON — Europe's major stock markets advanced on Wednesday as investors drew strength from easing Omicron virus concerns and shrugged off a mixed performance on Wall Street and in Asia.

US stocks were mixed in early trading as traders awaited the minutes of the latest Federal Reserve meeting that could signal when the central bank is likely to hike interest rates.

Traders have grown wary of the Fed, which has indicated it may hike rates repeatedly next year to curb inflation, potentially dampening the US stock rally enjoyed throughout the COVID-19 pandemic.

London firmed 0.1 per cent, while Frankfurt jumped 0.7 per cent to come within a whisker of its all-time high, and Paris won 0.8 per cent as it pushed further into record territory.

On Wall Street, the Dow continued to climb from its record closing high at the opening bell on Wednesday, but both the S&P 500 and the tech-heavy Nasdaq Composite moved further lower.

Markets wavered in Asia after a tepid overnight Wall Street lead, with inflation and expected interest rate hikes returning to the fore as Omicron fears ease.

In foreign exchange, the dollar slid versus the euro before minutes from the US Federal Reserve's latest interest rate meeting.

Oil rose further after climbing on Tuesday, when the Organisation of the Petroleum exporting Countries and its allies agreed as expected to raise output by 400,000 barrels per day in February.

"Overall, risk appetite remains positive," said ThinkMarkets analyst Fawad Razaqzada.

"The biggest driver behind this is relief that Omicron is not as deadly as Delta, which is fuelling expectations that travel restrictions and lockdowns will be lifted soon."

Omicron relief rally 

While the new COVID variant continues to spread rapidly around the world, forcing governments to maintain containment measures, its apparently milder symptoms have also allowed traders to focus more on future economic policies and plans to rein in surging prices.

China tech sector weighs 

Chinese technology firms, which have been hit by a crackdown from China's government, were a big drag on Hong Kong as it sank more than one per cent.

Concerns about a new COVID outbreak in the city that has led to the reimposition of containment measures added to the glum mood.

Shanghai stocks also slid but Tokyo clung onto positive territory.

In company news, China Mobile briefly soared around 10 per cent on its debut in Shanghai after the telecoms giant was delisted in New York under a standoff between Beijing and Washington. It ended only slightly higher, however.

The share offer is expected to raise $8.8 billion after the company exercises an over-allotment option, according to Bloomberg News, making it the largest on China's domestic stock markets for more than a decade.

NEW YORK — Japanese carmaker Toyota led US automobile sales in 2021, according to figures released on Tuesday, overtaking General Motors (GM) for the first time as a shortage of semiconductors roils the car industry.

The shift atop the rankings came after a year in which assembly lines were plagued by scarcity of the crucial computer chips, resulting in steep fourth-quarter sales declines for both companies.

But Toyota still managed to grow annual sales in the United States by 10.4 per cent to 2.3 million, while General Motors suffered a 12.9 per cent drop to 2.2 million.

Toyota, which has been credited with better management of the chip issue compared with some rivals, saw small annual gains for two top-selling sedans, the Camry and the Corolla, and a modest dip in sales of its Rav4 compact SUV. Its full-sized Highlander SUV scored higher sales in 2021.

GM, which relies more heavily on trucks than Toyota, saw an annual 10.8 per cent drop in its Silverado pickup trucks and a 6.4 per cent fall in its GMC truck line.

GM has held the crown as the number-one company in US auto sales since 1931, when it supplanted Ford, according to trade publication Automotive News.

Charlie Chesbrough, senior economist at Cox Automotive, noted that GMs' de-emphasis of sedans has cost it some market share, and characterized Toyota's ascendance as a "significant event" given GM's longtime leadership.

In a market starved of inventory, Toyota also may have benefitted from a smaller dealer network compared with GM, Ford and Stellantis, which owns the Chrysler brands, he said.

"The larger dealer networks of GM/Ford/Stellantis may have faced a greater challenge of keeping the right product in the right market for the right buyer," Chesbrough said in an email. "And, as a result, sales may have been trimmed because buyers couldn't find the product they wanted." 

Semiconductor struggle 

Cox has projected 2021 US sales of 14.9 million, up 2.5 per cent from the 2020 level but much below the five-year average. The consultancy has pointed to strong demand but anemic inventories, saying "demand is healthy but... you can't sell what you don't have".

A shortage in semiconductors has been one of the emblematic supply chain problems of the COVID-19 pandemic.

Analysts have cited outsized demand for electronics as a factor, but automakers have also seen supplies of the component affected by closures at factories in Asia due to COVID lockdowns or fires at manufacturing sites. 

Among other companies reporting sales, Honda scored an 8.9 per cent rise in US sales last year to 1.5 million vehicles, and Hyundai won a 19 per cent increase to 738,081 autos.

While GM has acknowledged that low car inventories are a problem, Chief Executive Mary Barra and other executives have touted strong vehicle pricing, which has enabled it to remain profitable even as sales sag. 

GM's inventories recovered somewhat during the quarter, finishing December at just under 200,000. That is about 55 per cent more than three months earlier, but less than half the level of a year ago.

"The key constraint for sales continues to be reduced inventory levels as a result of the semiconductor shortage. Those inventory levels are beginning to recover," said GM Chief Economist Elaine Buckberg.

"Consumers want to drive as much as before the pandemic, based on recent high levels of vehicle usage. High vehicle usage and deferred sales mean pent-up demand for new vehicles in the millions and building. That pent-up demand will support sales as vehicle supply improves."

The final tally for 2021 comes as US auto giants double down on electric vehicle investments. On Wednesday, Barra is scheduled to deliver a virtual keynote speech at the Consumer Electronics Show to unveil an electric version of the Silverado.

In a statement, Toyota pointed to $3 billion in new US investments targeting EV development, while Ford said Tuesday it will nearly double production capacity for the electric version of its top-selling F-150 pickup truck.